After-hours stock trading: How to trade after the market closes – Bankrate.com

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Our articles, interactive tools, and hypothetical examples contain information to help you conduct research but are not intended to serve as investment advice, and we cannot guarantee that this information is applicable or accurate to your personal circumstances. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional.
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After-hours stock trading can be an excellent way to get into or out of the market, especially on widely followed stocks. With extended-hours trading — which includes trading in the morning before the market opens — you can place trades before most of the market is ready to act.
Here’s what after-hours stock trading is, how to do it and what to watch out for.
Extended-hours stock trading is just one more way that you can trade stocks online. Stocks on the New York Stock Exchange and the Nasdaq are available for trade in extended hours, but only the largest and most in-demand stocks regularly trade during these periods.
Not only can investors trade after the regular session, but they can also place trades for the pre-market before the market opens in the morning. So some brokers refer to trading outside the regular hours as “extended-hours trading” or similar to include both the extra morning and evening sessions.
Stock trading in the U.S. normally takes place during the hours of 9:30 a.m. to 4 p.m. Eastern time. Anything outside those times is considered extended hours and includes these periods:
Trading either before or after the normal session used to be reserved for wealthier investors, but nowadays many online brokers offer the service to any client.
Interactive Brokers, Charles Schwab and Fidelity Investments all allow extended-hours trading, though orders may not be valid during the entire extended-hours sessions. For example, some brokers begin marketing orders in the pre-market session starting at 7 a.m.
Making an after-hours stock trade is easy to do, nearly as simple as a trade during regular hours, though there are certain other risks (see below). Here’s how to do it:
Just as you would for a regular trade, you’ll need to input the stock’s ticker symbol and the number of shares you want to buy.
When you input the order, your broker may allow you to set the time period, allowing you to trade in the extended-hours sessions. For a broker allowing extended-hours trades, you can specify when the trade may be executed:
Given the lower liquidity in extended-hours markets, it makes sense to set trades as limit trades, where you specify the trade price, in order to avoid a wild execution price that is well above or below the recent stock price. Some brokers only allow limit orders in extended trading.
Once you’ve set the conditions on your trade, you’re ready to place the trade.
But don’t be surprised if nothing happens for a while, or ever. With fewer investors participating in the extended session and the lack of market makers to ensure liquid markets, you’ll have to find an investor who’s willing to transact at your price. That may not happen, even at any price.
After-hours trading presents some risks for investors looking to take advantage of it:
Those are some of the biggest issues with after-hours trading, but essentially they all boil down to the lack of liquidity in most extended-hours markets.
After-hours stock trading allows you to place trades outside normal market hours, but that doesn’t mean you should place trades then. In many cases, the market is too thin and illiquid, and you run the risk of getting a less-than-ideal price when you could otherwise trade hours later and get the going rate in a robust market.
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